Did you know that 90% of companies struggle with handling expenses well?
If you work in finance and want to get better at managing expenses for your company in today's financial world, then this guide is for you.
Let's look into corporate expense management, its meaning, its main components, and how to implement it effectively.
1. What does corporate expense management mean?
The phrase corporate expense management describes how companies control the different expenses related to business, including employee expenses, travel expenses, supplies, and various other types of expenses.
Corporate expense management is an activity that mainly includes inspecting, analyzing, and controlling corporate spending.
This ability to manage expenses and avoid overly complex finances is crucial for creating healthy budgets.
2. Why is it important?
Corporate expense management goes beyond just keeping an eye on spending.
It involves analyzing expenses to make sure they match the company's goals.
This is important for several reasons:
Cost control: Through the real-time monitoring of expenses, the company will know where money has been spent.
Being able to identify these areas allows for timely action measures saving the company’s money.
Insightful decision-making: Accurate expense data from expense management software provides strong evidence of the company's spending habits and is a great resource for informed decision-making and planning ahead.
Fraud prevention: Corporate expense management keeps an eye on spending to catch any unusual or suspicious transactions, which helps stop fraud.
Also, setting up clear approval processes and keeping track of receipts makes it harder for anyone to do something dishonest without getting caught.
3. What are the key elements to establish corporate expense management?
To establish strong expense management practices, businesses should focus on the following key elements:
Policy development: Developing a well-defined and transparent expense policy is the base for efficient expense management.
These policies need to specify the designated expenses, approval flows, and reimbursement forms.
For example, the policy may specify limits for travel expenses based on employee roles or mandate the use of company-approved vendors for certain purchases.
Receipt management: Establish automated systems for collecting and storing receipts, simplifying expense management through digital tools like expense management software that permits employees to upload their receipts directly once they spend.
Approval workflow: The expense approval workflow helps ensure the company policies approve claims before reimbursement.
It may include the design of an approval hierarchy and making different kinds of expenses to be approved by different authorizers.
For example, high-value expenses may require approval from multiple stakeholders, while routine expenses can be automatically approved within predefined limits.
Expense tracking: Employing automated tracking mechanisms enables real-time monitoring of expenses, providing visibility into spending trends and variances.
Expense management software simplifies the process and reduces manual errors.
For example, customizable dashboards and reporting tools allow finance teams to analyze expense data by category, department, or period, enabling proactive decision-making and resource allocation.
4. Corporate expense management implementation
The implementation of expense management seems hard at first, but after breaking it into small steps, the process becomes clearer.It requires a structured approach:
Evaluation: First, evaluate the effectiveness of the current policies and operational processes to identify their weak points or shortages of existing tools, if any.
For example, survey employees to gather feedback on existing expense management systems and identify pain points or usability issues.
Software adoption: Invest in expense management software that adapts to the size and specificity of your company.
These services provide options such as scanning receipts, auto-approval, and reporting with any particular pattern requested.
Training and communication: Inform employees on why they need to know the importance of this and get the proper procedure for submitting expenses.
Organize training where you can demonstrate the method of using expense management tools, including the company policies observation.For example, conduct interactive workshops or webinars to demonstrate how to submit expenses, track approvals, and utilize expense management software effectively.
Monitoring and optimization: Expense management is an ongoing process that requires continuous monitoring and refinement.
Regularly review expense data, get feedback from stakeholders, and adapt policies and workflows as needed to enhance efficiency and compliance.
In conclusion
Corporate expense management is the core that offers the company’s financial stability, operational effectiveness, and policy compliance.
Clear rules, simple processes, and helpful digital tools enable businesses to monitor spending, mitigate risks, and foster long-term success and growth.
Want to know more about expense management?
Visit this link: https://www.pemo.io/expense-management
